THE BUSINESS CASE FOR
SINGLE-PAYER HEALTH CARE
Stephen B. Kemble, MD
Clinical Assistant Professor of Medicine
John A. Burns School of Medicine
The Rotary Club
March 11, 2014
Disclosure
• No financial conflicts of interest to disclose.
• I receive no money whatsoever for any of my
involvement in health care reform and health
policy activities.
Definition
• SINGLE-PAYER: Public funding that pays for the
health care of the entire population for a
geographic/political entity.
• Private care delivery: Traditional Medicare, FFS
Medicaid, Canada
• Public care delivery: VA, Military health system,
Indian Health Service, Great Britain
Eliminates private health insurance except for
supplemental benefits not covered in singlepayer program.
2011 healthcare spending per capita
US Public Spending for Health Exceeds
Total Spending in Other Nations
$10,000
$8,950
$8,000
$3,201
$6,000
$5,640 $5,749
$4,000
$2,000
$3,970
$2,940
$3,280
$3,140
UK
SWE
$4,350
$4,780
$4,970
CAN
HOL
$JAP
Total
FRA
US Public
GER
SWI
USA
US Private
Data are for 2011
Sources: OECD 2013; Health Affairs 2002 21(4)88
Health Costs: USA vs Canada
19%
Health
costs %
of GDP
17%
15%
13%
USA
“Uniquely
American”
Single Payer
Implemented
11%
9%
Canada
7%
5%
1960
1970
1980
Source: Statistics Canada, Canadian Institute for
Health Info, and NCHS/Commerce Dept.
1990
2000
2014
Are we getting better health care?
Life Expectancy
83
82.7
82
Years
81.9
81
80.8
80
81.0
82.2
81.1
79
78
78.7
77
76
USA
Germany Canada
UK
Sweden France
italy
Note: Data are for 2011 or most recent year available
Source: OECD, 2013
Decline in Preventable Deaths 1998-2002
Preventable deaths per 100,000 (males)
30%
25%
20%
21%
22%
17%
15%
13%
10%
14%
14%
5%
4%
0%
USA
Japan
Canada France
Italy
Australia
UK
Nolte & McKee, Measuring The Health Of Nations,
Health Affairs, Jan-Feb 2008
Infant Mortality
Deaths in First Year of Life Per 1,000 Live Births
7
6
6.1
5
4.9
4
3.8
3
3.6
3.5
3.4
2
2.1
1
0
USA
Canada Australia Germany France
Italy
Sweden
Note: Data are for 2011 or most recent year available
Source: OECD, 2013
Maternal Mortality
Deaths per 100,000 Live Births
14
12
12.7
10
8.9
8
7.5
6
6.6
4
4.7
3.4
2
0
USA
France
Canada
UK
Germany
Australia
Note: Data are for 2011 or most recent year available
Source: OECD, 2013
How Many People
Don’t Have Health Insurance?
USA with the ACA
30
Million
US Census Bureau, 2012
Canada
How Many People Go Without
Some Medical Care Because of Cost?
USA
115
Million
Commonwealth Fund, Schoen 2007
Canada
How Many People Die Each Year
From Not Having Insurance?
USA
45,000
Wilper, et al “Health Insurance and Mortality in U.S.
Adults,” American Journal of Public Health;
Vol. 99, Issue 12, Dec 2009
Canada
How Many People Are Involved in
Medical Bankruptcies Each Year?
USA
2 Million
62% of Americans file cases
866,000 total cases
affecting 2 million Americans
Excludes those too poor to
declare bankruptcy
Source: Himmelstein et al. Am J Med: August, 2009
Canada
What costs us so much more?
Are we utilizing too much care?
Hospital Inpatient Days per Capita
1.2
1.1
1.0
0.9
0.8
0.6
0.8
0.7
0.6
0.6
USA
Canada
0.4
0.2
0.0
UK
Australia
France
Switzerland
Note: Data are for 2011 or most recent year available
Source: OECD, 2013
Physician Visits per Capita
14
13.1
12
10
8
6
4
4.1
4.6
5.0
Denmark
UK
6.6
6.7
Australia
France
7.4
2
0
USA
Canada
Japan
Note: Data are for 2011 or most recent year available
Source: OECD, 2013
Is it “moral hazard” because
patients don’t have enough “skin
in the game?”
Deductibles Are Rapidly Increasing
40%
Percent of
workers with
deductibles
>$1,000
38%
35%
34%
30%
31%
25%
27%
20%
22%
18%
15%
10%
10%
12%
5%
0%
2006 2007 2008 2009 2010 2011 2012 2013
Kaiser/HRET Survey of Employer-Sponsored Benefits, 2013
We Have the Most “Skin in the Game”
$1,200
$1,000
Out-of-pocket
dollars per
capita
$968
$800
$733
$600
$640
$571
$400
$200
$315
$298
$267
UK
FRA
HOL
$0
USA
Note: Data are for 2011 or most recent year available
Figures adjusted for Purchasing Power Parity
Source: OECD, 2013
AUSL
CAN
GER
Financial Barriers Worsen
Diabetes Care and Outcomes
50%
40%
41%
39%
30%
20%
10%
32%
25%
23%
16%
23%
28%
24%
27%
20%
14%
0%
No A1C
check
12 mos.
No eye
exam
12 mos.
No foot
Stroke
Retino- Non-healing
exam
pathy
foot sore
Financial Barrier
No Financial Barrier
JGIM On-Line, 9/27/2013.
Note: Financial barrier = needed to see a doctor
in last 12 months but couldn’t
Medicare HMO Copayments Drive
Fewer Office Visits, More Hospitalizations
15
13.4
10
Difference
between plans
that did and
didn’t raise
copays
5
2.2
0
-5
-10
-15
-20
-19.8
-25
Outpatient
Visits
Hospital
Admissions
Hospital
Days
Source: NEJM 2010;362:320
All figures are per 100 enrollees
Restricting Access Increases Costs
• Restricting care requires bureaucracy
that costs more than it saves
• We already rely heavily on incentives
to deliver less care and pushing more
costs onto patients.
• If these worked to control costs, we
would not be spending twice as much
as other advanced countries!
So, the reality is:
• We’re spending twice as much
• We’re under-utilizing, not over-utilizing care
• Our health outcomes are worse
Then what is costing us so much
more than other countries?
Growth of Physicians vs Administrators
Growth Since 1970
3000%
2500%
2000%
1500%
1000%
500%
0
1970
1980
Physicians
1990
2000
2010
Administrators
Data updated through 2013
Source: Bureau of Labor Statistics; NCHS;
Himmelstein/Woolhandler analysis of CPS
Hospital Billing and Administration
$800
$700
$741
Dollars per $600
capita, 2014
$500
$400
$300
$200
$186
$100
$0
USA
Canada
Source: Woolhandler/Himmelstein/Campbell
NEJM 2003;349:769 (updated 2013)
Physicians’ Billing and Office Expenses
$700
$600
$654
Dollars per $500
capita, 2014
$400
$300
$200
$184
$100
$0
USA
Canada
Source: Woolhandler/Himmelstein/Campbell
NEJM 2003;349:769 (updated 2013)
Overall Administrative Costs
$4,000
Dollars per
capita, 2014 $3,000
$3,006
$2,000
$1,000
$787
$0
USA
Canada
Source: Woolhandler/Himmelstein/Campbell
NEJM 2003;349:769 (updated 2013)
Competitive Private Health Insurance
• Administrative costs: 5-6 times that of
public systems
• Incentive is to avoid risk (caring for sick
people)
• “Race to the bottom” among plans
• Misguided and costly efforts to centrally
manage health care providers
Can the Affordable Care Act work?
ACA Fails for Sick People
• Website rollout complications
• Low value plans (bronze, silver)
• Deter needed care
• For individual making only $25,000 (max
subsidies), > $7,500/yr in premiums,
deductibles, & co-pays !!!
• Access problems:
• MD shortage, narrow & ghost networks,
dysfunctional Medicaid
Ineffective ACA “Cost Controls”
• Preserves private, competitive insurance model
• Leaves obstacles to access in place
• “Cost control” aimed at further restricting care
• Pushes more cost onto patients
• Shifts insurance risk to doctors and hospitals
• Increases administrative complexity and cost
All counter to evidence for achieving “Triple Aims” better quality, better health, lower cost!
Can the Affordable Care Act work?
• Doesn’t work for sick people
• Relies on strategies shown to
increase costs
The Single-Payer Alternative – HR 676
• Everyone covered, all medically necessary care
• Minimal or no deductibles & co-pays
• Access to care based on need, not means
• Insurance risk is managed by risk pooling alone,
pooled across entire population – not shifted onto
doctors, hospitals, and patients.
• Vastly simplified administration
• Minimizes centralized management of care &
bureaucracy
Single-Payer Cost Control
Assure access to cost-effective
care for all
2. Simplify, streamline administration
3. Use admin savings to reduce
prices
1.
• Hospitals - global budgeting
• Doctors – negotiated fees, simplified billing,
support quality improvement
• Drugs and medical equipment - negotiated
prices, bulk purchasing
Single-Payer Savings
• Hospitals (~7%): global operating budgets – no
itemized billing
• Doctors (~5%): Reduced admin and malpractice
cost, incentive-neutral pay – FFS based on time, or
salary
• Patients (~5%):
• better access to cost-effective outpatient care
• reduced complications
• reduced ER and hospital use
(Savings as % of total health spending)
Sources include Price Waterhouse Coopers, Blanchfield et al, “Saving Billions of Dollars—and
Physicians’ Time— by Streamlining Billing Practices,” Health Affairs, Apr. 29, 2010, Lewin Group
and Friedman economic analyses for California, Maryland, Colorado
Single-Payer Savings
• Drugs and Medical Equipment (~6%):
• bulk purchasing, negotiated prices, less fraud
• Business (~1%):
• no health insurance administration
• much lower worker’s comp, liability, and vehicle
insurance
• No COBRA or retiree health benefits
Single-Payer Savings
• Administration (~16%): focused on assuring care
and payment, not avoiding “risk”
Insurance Administration
Managed Care Administration
No:
• Exorbitant exec salaries,
marketing, lobbying, profit
• Underwriting, insurance
reserves, broker fees, exchange
fees
• Eligibility determination, narrow
networks
• Care managed by doctors &
hospitals, not health plans
• No complex financial incentives
and risk adjustment
• Simplified data for QI
• No distortion of data due to “payfor-documentation”
• Much less fraud and abuse
• For entire health care system: ~ 30-40%
savings
HR 676 “Medicare for All”
Covers Everyone and Spends Less
$ Billions
$200
0
-$200
-$400
-$600
$142
Increased utilization (especially home health and dental)
$110
$74
Covering the uninsured
Medicaid Rate Adjustment
Government administration ($23B)
$153 Health insurance administration
$178
Increased market power (pharma and devices)
$215
Admin costs to providers
New Costs Savings
Friedman, G. Dollars & Sense. March/April 2012
HR 676 “Medicare for All”
Covers Everyone and Spends Less
New
Costs:
$326 B
Net savings:
New
Savings:
$569 B
Friedman, G. Dollars & Sense. March/April 2012
$243 Billion
Cover everyone
with better benefits
and spend less.
What Do You Spend on
Health Care Benefits?
USA Employers Today
Single Payer Model
7 - 12%
of wages
3.3% tax
on wages
Bureau of Labor Statistics
Business Health Coalition for Single Payer
8 Ways that Single Payer
Strengthens American Businesses
Reductions in
Direct Costs
Reduced
Employer Risk
•Cost of health care
benefit
•More predictable future
costs
•Health care benefit
management costs
•Eliminate risk of
employees with high
medical costs
•Worker Comp, auto and
liability insurance
•Retiree health benefits
•Eliminates contentious
item in labor negotiations
Level the global playing field
for business